Geopolitics remain in focus today with President Trump’s meeting with Chinese President Xi the key event. A dinner tonight will include several US business leaders. Earlier, the US and China agreed to extend the trade truce two months, to January 10. Futures drifted lower this morning, before Bloomberg reported that Oracle sent the developer of its giant Project Jupiter data center a force majeure notice to delay payments IF the data center is not completed on time, though Oracle said the project remained on time.

The S&P opened down 0.5% but that has basically marked the low of the day. The general consensus was that a breakthrough in the Iran situation wasn't imminent, but around noon Reuters reported the US and Iran were discussing a phased deal to reopen Hormuz. That had the expected effect: the S&P jumped into positive territory, to over 7700, as oil and rates fell on the news. Prices have moved back a little bit since then. The S&P is slightly lower with the equal-weight and Russell 2000 lagging modestly.

Comm Services is the leading sector, with META +3%. Healthcare and Energy are up as well. Oil is higher through some volatility. The other sectors are flat to lower with Materials lagging. The treasury curve had twist-steepened earlier as the 2y was down ~3bp earlier while the 10/30y rose 2-3bp. However as oil came back off its lows the 2y is now flat and the long-end is up ~5bp. The US Dollar index is higher again as the yen continues to weaken back towards ¥160.